Economic and accounting profits

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Reference no: EM131377212

Economic v. Accounting Profits.

After getting released by Cleveland Browns, Johnny “Football” Manziel opens a shop that sells running/exercise apparel in 2016. Assuming that it is the year 2017, and Johnny Football has sold $3,000,000 worth of running shoes, sweat outfits, shorts, etc. The wholesale cost of this merchandise was $750,000. He purchased $30,000 worth of electricity, paid out $95,000 in wages to his sales people and cashiers and spent $50,000 each on rent and advertising. Johnny Football started the business after turning down a salary offer of $100,000/yr. with a Texas radio station to broadcast Texas A&M football games. He also invested $200,000 of his own money into the company at a time when alternative investments are yielding $6,000 per year. He also estimates his entrepreneurial talents to be worth $75,000/yr.

a. What was Johnny’s economic and accounting profit?

Reference no: EM131377212

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